Trudy Sorensen paid $$ 150$ to rent a carnival booth for four days. She has to decide
Question:
Trudy Sorensen paid $\$ 150$ to rent a carnival booth for four days. She has to decide whether to sell donuts or popcorn. Donuts cost $\$ 1.20$ per dozen and can be sold for $\$ 2.40$ per dozen. Popcom will require a $\$ 75$ rental fee for the popcom maker and $\$ 0.05$ per bag of popcom for the popcorn, butter, salt, and bags; a bag of popcorn could sell for $\$ 0.30$.
1. Compute the break-even point in dozens of donuts if Trudy decides to sell donuts exclusively and the break-even point in bags of popcom if she decides to sell popcorn exclusively.
2. Trudy estimates that she can sell either 50 donuts or 30 bags of popcorn every hour the camival is open ( 10 hours a day for four days). Which product should she sell?
3. Trudy can sell back to the baker at half cost any donuts she fails to sell at the carnival. Unused popcorn must be thrown away. If Trudy sells only 80 percent of her original estimate, which product should she sell? (Assume that she bought or produced just enough to satisfy the demands she originally estimated.)
Step by Step Answer:
Survey Of Accounting
ISBN: 9780538846172
1st Edition
Authors: James D. Stice, W. Steve Albrecht, Earl Kay Stice, K. Fred Skousen